Journal of Student Financial Aid
Volume 45 | Issue 2
Article 3
7-27-2015
Non-Borrowing Students’ Perceptions of Student
Loans and Strategies of Paying for College
Mo Xue
The University of Alabama, [email protected]
Xia Chao
Duquesne University, [email protected]
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Recommended Citation
Xue, Mo and Chao, Xia (2015) "Non-Borrowing Students’ Perceptions of Student Loans and Strategies of Paying for College," Journal
of Student Financial Aid: Vol. 45: Iss. 2, Article 3.
Available at: http://publications.nasfaa.org/jsfa/vol45/iss2/3
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Non-Borrowing Students’ Perceptions of Student Loans and Strategies of
Paying for College
By Mo Xue and Xia Chao
With the notable shift from grants to loans over the past several decades, many researchers have
argued the positive impact of financial aid on student college choice, enrollment, and persistence.
However, literature indicates that students from economically disadvantaged backgrounds are less
likely to take loans to finance postsecondary education than those from affluent conditions.
Qualitative research on the reasons for non-borrowers’ aversion to loans and strategies for college
payment is rather scant. This study explores 30 lower- or lower-middle-class non-borrowing
students’ lived experiences surrounding student loans from a qualitative phenomenological
research lens. Data are collected from semi-structured interviews. Data analysis shows four main
reasons that the participants generally avoid borrowing as they decide where to attend and how to
pay for college: parental influence, fear of economic burden, underestimation of the value of college
education, and lack of information about the loan system. The strategies they employ for college
payment include scholarships and grants, family support, part-time jobs, and prepaid college
tuition programs. This study uses peer debriefing to ensure its trustworthiness. Limitations of this
study and implications for future research and practice are discussed.
Keywords: student loans, non-borrowing students, college-payment strategies
S
ince the early 1980s, with the rapidly increasing cost of college attendance and lower rates of growth in
grant aid, federal financial aid to students has shifted dramatically from a system mainly relying on
need-based grants to one dominated by loans (Price, 2004). This has required students who need
financial support to rely primarily on loans to pay for college. In 1991-92, loans occupied 47% of the total
amount of student aid while grant aid occupied 50%. By 2000-01, grants had declined to only 41%, and
loans had increased to constitute 58% of the total aid awarded (College Board, 2001). The amount of loans
increased from $19,565,000 in 1991 to $43,138,000 in 1999 (College Board, 2002). During the last decade,
student loans had more than doubled from $49,833,000 in 2000 to $109,929,000 in 2009. In 2010-11, the
federal loans constituted 39% of the financial aid received by undergraduates and 69% of the graduate
student aid. Federal grants took up 27% of undergraduate student aid and only 2% of the aid provided to
graduate students in 2010-11 (College Board, 2011). All these data indicate that loans have become a central
pillar in the financial aid system for postsecondary education.
Although loans provide a large number of students with opportunities for college choice and access,
many studies have reported the hardships and burdens caused by loans to borrowing students, particularly
to those from lower-class backgrounds (Baum and O’Malley, 2003; Baum and Saunders, 1998; Burdman,
2005; Price, 2004). A review of literature shows that many students from disadvantaged backgrounds are
eligible to take loans to support their postsecondary education, but are generally less likely than others to
borrow. As a result, the increasing reliance on loans, growing college cost, and these students’ tendency to
avoid debt may limit their choices and reproduce their current disadvantaged economic, cultural, and social
situations (Kane, 1999; Orfield and Ashkinaze, 1991; Schwartz, 1985).
Mo Xue is currently a Ph.D. candidate in the Department of Educational Studies in Psychology, Research Methodology, and Counseling
at the University of Alabama. Xia Chao (Ph.D.) is assistant professor in the School of Education at Duquesne University.
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Xue and Chao: Non-Borrowing Students’ Perceptions of Student Loans and Strategies of Paying for College
Despite growing research on student loans, most of the studies are quantitative in nature; qualitative
research on this issue is scant. This qualitative phenomenological study intends to fill this gap by
investigating non-borrowing students’ perceptions of loans and strategies for college payment. Two research
questions guide this study:
1. How do non-borrowing students perceive borrowing and what are the reasons for their attitudes?
2. How do non-borrowing students pay for college?
Theoretical Framework: Economic Capital, Cultural Capital, and Reproduction
We grounded our analysis for this study in the theory of capital and reproduction (Bourdieu, 1977; Bourdieu
and Passeron, 1990). Bourdieu proposed that capital forms the foundation of an individual’s social life and
status. The more capital one has, the more resources and opportunities one can access, and the more
powerful the position one can obtain in a given social context. Bourdieu and (1977) defined three types of
capital: economic, cultural, and social. Economic capital refers to one’s ownership of economic resources
such as materials, cash, assets, etc. Cultural capital refers to the collection of symbolic elements such as
knowledge, skills, education, mannerisms, and credentials. And, as described by Bordieu and Waquant
(1992), “Social capital is the sum of the resources, actual or virtual, that accrue to an individual or a group
by virtue of possessing a durable network of more or less institutionalized relationships of mutual
acquaintance and recognition” (p. 119). Bourdieu (1977) argued that cultural capital, acquired for equipping
oneself and promoting one’s social mobility, is produced by economic capital. Economic capital and
cultural capital are major sources of social inequality.
The concept of capital and reproduction has been widely applied to the education system. McDonough
(1997) stated that college choice, as a symbol of cultural capital, is a socially constructed and complex
process influenced by many factors such as high school academic performance, parents, family
socioeconomic status (SES), college cost, financial aid, knowledge about college, and perceived cost-benefit
analysis of attending college. Among all these factors, family SES, college cost, and financial aid directly
influence students’ decisions about paying for postsecondary education. Essentially, economic capital, to a
great extent, determines one’s access to cultural capital and opportunities for social mobility. Students from
upper-SES families can find ways to enhance the inheritance of their existing advantageous cultural capital
and to promote their SES. In contrast, some socioeconomically disadvantaged students would be deprived
of certain rights, limiting their higher education options and ultimately reducing their ability to compete for
jobs, putting them in a worse economic situation. McDonough (1994) explained class inequalities in
educational attainment:
Although college admissions environments influence some applicant behavior, the low-SES
students….do not participate in the described college choice behaviors and instead are
influenced more by their limited financial resources and by local university admissions’
opportunities. Both of the high-SES schools….are shaped by a national, volatile, competitive
college admissions environment that is exacerbated by a local, community culture focused on
prestige (p. 443).
Hence, the educational system reproduces cultural capital based on SES, and educational attainment is
facilitated by the possession of economic capital and higher-class habitus. This study uses Bourdieu’s theory
to explore how perceptions of borrowing for higher education may lead to unequal distribution of cultural
capital between classes.
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Xue and Chao: Non-Borrowing Students’ Perceptions of Student Loans and Strategies of Paying for College
Literature Review
With the notable shift from grants to loans, many researchers have investigated the impact of the financial
aid system on college choice, enrollment, and persistence (e.g., Creamer, 1985; Dynarski, 2000; Heller, 1999;
Kim, 2004; Perna 1998; Somers, 1994). Generally speaking, loans have helped a large number of students
attend college, and students are borrowing more than ever (Baum and O’Malley, 2003). In 1999-2000, 64%
of students graduated with student loan debt, compared to 42% in 1992-93, and the average debt had
doubled to $16,928 over the period. In addition, the number of seniors who graduated with more than
$20,000 in debt increased from 5% in 1992-93 to 33% in 1999-2000 (King and Bannon, 2002). In 2000-01,
22% of undergraduate students took out Federal Stafford Loans. This percentage increased to 28% in 200506, and to 34% in 2010-11. The average Stafford Loan amount borrowed by undergraduate students (in
2010 dollars) was $5,628 in 2000-01, $5,538 in 2005-06, and $6,744 in 2010-11 (College Board, 2011). Native
American, African American, and Hispanic students borrowed more than Caucasian and Asian American
students to finance their undergraduate education. Dependent students from lower- and lower-middleincome families borrowed less than those from middle- and upper-middle-income families (Heller, 2001).
Studies addressing students’ attitudes toward borrowing for financing postsecondary education indicate
that students from socioeconomically disadvantaged backgrounds generally hold negative attitudes.
Mortenson (1988) stated that most students show favorable attitudes towards taking student loans, but some
groups of students, such as women, those with less education, older persons, and those from low-income
families are less inclined to take loans. Using a survey of 1,953 prospective higher education students,
Callender and Jackson (2005) found that students from lower social classes are more debt averse than those
from other social classes, and fear of debt is far more likely to deter them from college attendance. King and
Bannon (2002) proposed that low-income students may often face more difficulty in repaying their loans
after graduation due to familial financial conditions. Price (2004) argued that student loans, operating like a
regressive tax on low-income students, place an additional burden on those students who successfully
pursue postsecondary education. Baum and O’Malley (2003) also found that as the percentage of gross
monthly income spent on education loan payments increases, negative feelings about student debt increase.
Research shows that loans may burden borrowing students and affect their subsequent study and life
(Baum and Saunders, 1998; Choy, Li, and Carroll, 2005; Cofer and Somers, 1999). Using the data from the
Baccalaureate and Beyond Longitudinal Study, Price (2004) discovered strong relationships between educational
debt burden and students’ characteristics such as race, ethnicity, gender, and income. Price’s study indicates
that students from lower-income families or Black or Hispanic students are more likely to have excessive
debt burden than White students or students from higher-income families. Baum and O’Malley (2003)
stated that 42% of the students who did not go on to graduate school attributed this to their loan burdens.
In contrast, Rothstein and Rouse’s (2011) quantitative study suggested that borrowing is an ideal mechanism
for financing college education because it can help students to internalize the full costs of their human
capital investment. They stated that the negative effects of loans should be quite small because student debt
constitutes only a small portion of the average lifetime earnings of a college graduate. Thus, “there is no
reason to think that high levels of student debt represent a market failure that warrants intervention”
(Rothstein and Rouse, 2011, p. 162).
Although the purpose of the financial aid system is to promote equality in college choice and access,
loans have different effects on students from different backgrounds. The shift from grants to loans may
limit college choices for some groups of students (e.g., Davis and Johns, 1989; Mortenson, 1991). According
to Baum and O’Malley (2003), 40% of the respondents who took the National Student Loan Survey reported
that loans delayed their return to school or made them alter their school choices by selecting a less
expensive college. Fifty-one percent of Hispanics, 46% of Asian Americans, and 44% of African Americans
said that debt limits their choice of educational institutions, compared to 35% of Whites. Baum (2003)
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Xue and Chao: Non-Borrowing Students’ Perceptions of Student Loans and Strategies of Paying for College
stated that “the necessity of relying on loans may discourage some qualified high school graduates,
particularly those from low-income and underrepresented backgrounds, from participating in postsecondary
education” (p. 1). Burdman (2005) further pointed out the student debt dilemma: “[W]hile for some
students, the availability of low-interest loans widens opportunities, for others, the increasing prominence of
loans could actually narrow their options and decrease their chances of attending and completing college”
(p. 2).
A review of the literature surrounding this issue shows that students from lower- or lower-middleincome families usually hold negative attitudes toward borrowing. However, the reasons for non-borrowers’
debt aversion and their strategies of paying for college have been less investigated so far. This article intends
to contribute to the literature by using a phenomenological research lens to explore reasons for nonborrowing students’ perceptions of loans.
Methodology
We used a qualitative phenomenological inquiry approach to explore non-borrowing students’ experiences
with loans and payment of college costs, as well as the meanings they construct about their experiences.
Phenomenology “aims to get to the things themselves through creating written descriptions of personal
experience as the source of all claims to knowledge” (Conklin, 2007, p. 276). The major concern of
phenomenological analysis is to describe “what people experience and how it is that they experience what
they experience” (Patton, 1990, p. 71) from their own perspectives. It requires the researcher to suspend his
or her taken-for-granted presuppositions, look at the phenomena openly, and seek meanings and structures
by allowing the researcher’s consciousness to interact with the phenomena (Moustakas, 1994; Rossman and
Raliis, 1998). The researcher describes the commonalities or the underlying structures of the shared human
experiences based on reflective analysis and interpretation of research participants’ stories (Giorgi, 1985;
Moustakas, 1994).
Data Collection
Due to its interest in the meaning of a phenomenon as it is lived by the participants, phenomenology
primarily relies on interviews for data collection (Seidman, 2006). In this study, we collected data mainly
through semi-structured, face-to-face interviews. The purpose of an interview is to find out “what is in and
on someone else’s mind” (Patton, 1990, p. 278) and to enter into that individual’s inner perspectives.
Since the target population of this study was non-borrowing students from lower- or lower-middle-class
families, all the participants in this study were recruited through purposeful sampling based on certain
criteria. Purposeful sampling, as the dominant sample selection strategy in qualitative research, seeks
information-rich individuals from the target population who can best inform the researcher about the
phenomenon under investigation (Creswell, 2009; Patton, 1990). According to Thompson and Hickey’s
(2005) classification, common annual household incomes are less than $2,000 for lower-class families,
$16,000 to $30,000 for working-class families, and $35,000 to $75,000 for lower-middle-class families. The
participants of this study consisted of undergraduate or graduate students who came from lower- or lowermiddle-class backgrounds and were not taking or did not take loans for their undergraduate education.
A semi-structured interview protocol was drafted in advance so that the interviewers could not only
maintain the research focus and conduct systematic and comprehensive interviews, but also freely further
explore participants’ experiences and constructed meanings. The interviewers mainly asked participants the
following questions: How did you decide where you would attend for college education? How influential
was cost and how you would pay for college in your decision about where you would attend? How
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influential was your family’s income in your decisions about how to pay for college? Did your parents
generally avoid borrowing?
Each interview lasted from approximately 30-60 minutes. The interviewers audio recorded all interviews
and then transcribed them verbatim to protect the confidentiality of the participants. A total of 83 interview
transcripts were combined in a data set. Thirty transcripts randomly selected from the data set served as the
data for this qualitative study.
Participants
Nineteen females and 11 males composed the selected group of 30 participants. Twenty-five participants
were White and five were Black. Their ages ranged from 20 to 41, with a mean age of 27 years old. Nine
public universities, two private universities, and two community colleges composed the 13 institutions
where the participants were taking or had taken their undergraduate studies. Twelve were enrolled as
undergraduate students, and 18 had finished their undergraduate study. We removed all identifying
information from the results and used pseudonyms for the data report in order to ensure the participants’
anonymity and privacy.
Data Analysis
Data analysis relied on Creswell’s (2009) six generic steps to qualitative data analysis, Strauss and Corbin’s
(1998) open coding and axial coding, and Moustakas’ (1994) inductive analysis technique. The first step
involved organizing and preparing raw data for analysis. The researchers carefully read through the data
multiple times in order to obtain a general sense of it and reflect on its overall ideas. The second step
involved reviewing the transcripts and highlighting participants’ experiences that appeared particularly
important. Step three involved performing a detailed analysis through coding. Coding is the process of
organizing the materials into chunks or segments of text before bringing meaning to information (Creswell,
2009; Rossman and Rallis, 1998). We started with open coding (Strauss and Corbin, 1998) by breaking the
data into segments using keywords or phrases that could best describe that data segment for analysis and
categorization. After completing open coding, we performed axial coding (Strauss & Corbin, 1998) by
grouping topics that related to each other into higher-level patterns, categories, or themes. This reduced the
initial list of categories identified through open coding. The coding used an inductive analysis process to
build emerging patterns and themes from the bottom up and organize the data into more abstract units of
information. The fourth step summarized the participants’ demographic characteristics. Step five advanced
the description and presentation of the themes through review and comparison of participant statements
and selection of the most representative ones to support each theme. Finally, we developed a descriptive
analysis and offered a unified description of the phenomenon based on the theoretical framework, literature
review, synthesis of textual elements, and the interpretation of the interview content.
Trustworthiness
This study used peer debriefing to challenge the researchers’ subjective bias and enhance the trustworthiness
of this research (e.g., Creswell, 2006; Maxwell, 1996). Peer debriefing is “a process of exposing oneself to a
disinterested peer in a manner paralleling an analytical session and for the purpose of exploring aspects of
the inquiry that might otherwise remain only implicit within the inquirer’s mind” (Lincoln and Guba, 1985,
p. 308). We invited a researcher who is skilled in qualitative methodology to review the transcripts as well as
the emerging categories and themes coded by the researchers. Intercoder agreement initially reached
approximately 85 percent. All disagreements were resolved through discussion. Finally, the invited
researcher accessed the final report to identify any subjective bias in data interpretation, over-emphasis on
any points, or the omission of pertinent information. The peer debriefing process enhanced the credibility
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Xue and Chao: Non-Borrowing Students’ Perceptions of Student Loans and Strategies of Paying for College
of this qualitative study (e.g., Creswell, 2006; Lincoln and Guba, 1985; Maxwell, 1996). Additionally, the
invited researcher’s expertise in qualitative methodology and philosophy deepened the analysis and
interpretation of patterns and themes.
Results
Reasons for Debt Aversion
Data analysis shows that a majority of the participants avoided borrowing as they decided where to attend
and how to pay for college. Thirteen participants clearly stated that they would be unwilling to take loans, 14
participants reported that they might consider loans when necessary, and only three participants said they
would be willing to take loans. Based on their interview responses, the four main reasons for their debt
aversion are parental influence, fear of economic burden, underestimation of the benefits of college
education, and a lack of information about the student loan system.
Parental Influence
The results indicate that parents play an important role in advising students to make decisions on college
application and payment methods. Twenty-two participants reported that their parents helped them make
the final decision on whether to take loans because these participants thought they were not economically
independent or mature enough to make such important financial decisions during the college application
process. They also acknowledged that their parents have a direct influence on shaping their negative
attitudes toward incurring debt.
Many participants mentioned that their parents generally avoid borrowing money if there is another way
to pay, or prefer to take loans only for large purchases, such as buying a vehicle or a house. Some
participants reported that their parents have no problem with borrowing, but may feel “uncomfortable with
the concept of debt,” so they try to “stay away from credit cards and things like that.” For instance, Dustin
talked about his mother’s hesitancy about borrowing:
She would much rather have gone to the bank and said, ‘I need a second mortgage on my home
to pay for my child’s education,’ rather than getting a student loan….She thought it was a bad
deal with maybe the interest rate.
When asked about the reasons for her parents’ dislike of indebtedness, Marissa explained,
My dad would probably think that when people borrow money, they’re kind of digging
themselves a hole and it’s harder to get out and it kind of seems like a setback a little bit.
Marissa’s comments reveal her father’s fear of debt. Not wanting their children to be burdened with debt
after graduation, many of the interviewees’ parents had imparted their ideas of money management to their
children. Bethenny talked about how her parents had taught her financial budgeting and management skills
since childhood.
When we started spending money, they were very cautious about teaching us about the right and
wrong ways to build credit, and things we can do at a young age like make sure when you get
your first apartment that you pay your bills on time and what can happen when you
don’t….They did teach us along the way just by modeling good behavior.
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Xue and Chao: Non-Borrowing Students’ Perceptions of Student Loans and Strategies of Paying for College
Jennifer’s aversion to borrowing originates from her parents’ financial management and consumption
patterns. She said,
They never have credit card debt. They always taught me to pay it off in full. Do not spend
money you do not have….They don’t like doing any sort of loan or deferring payment if they
can help it.
Jennifer further stressed that her parents tried to avoid loans. Learning from her parents’ behaviors
and concept of money, Jennifer is strongly opposed to taking loans for undergraduate education.
The interview results also indicate that parents have affected some participants’ future financial plans for
the next generation’s college education. When asked whether they would like their current children or future
children to take education loans, 20 participants emphasized that borrowing would be the last resort. For
example, Beth said,
I kind of inherited my dad’s desire to not have debt….I would like my child to not have to, but
if that is the last resort, then yes, I would be okay with him borrowing money to pay for college.
Bethenny expressed a similar idea:
I would do everything I could to avoid them having to take on loans….I think I am going to try
to be much more proactive in paying for their education, opening some kind of fund when they
are born and putting money into it each year until they are 18.
Christine believed that there is an obvious conflict between experiencing college and making an effort
in paying off debt. She said that she will be very upset if her children have to take on loans, stating,
I was able to have the experience that I needed at college because I didn’t have to worry about
money. I worried about money nonetheless because I am an anxious person, but loans definitely
restrict a person’s experience, and what is the point of going to college if you can’t experience it
all.
She said that she would do whatever she can do to help her children to complete college without debt.
Fear of Economic Burden
Regardless of their attitudes toward loans, 28 of the 30 participants reported that if they had taken loans, it
would have changed their experiences during and after college. Their comments include phrases such as
“work more hours,” “not involved in campus activities,” “worry about money and the future,” “always
hanging over my head,” “influence my academic study,” “influence my life after graduation, and “affect my
decisions on graduate school.” These remarks clearly reflect their fear of borrowing and the accompanying
economic burden.
For example, Hannah suggests that taking out loans would have definitely changed her overall college
experience. She said,
If I would have had student loans…I probably would have tried to work off campus so that I
could work more hours and have more money. I probably wouldn’t have lived in the dorms
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because the dorms cost so much more than living off campus….I would have worried so much
about money all the time and not be thinking about maybe enjoying my time at school.
Betty noted,
I might have been more tempered in the types of activities I did while in college. I may have felt
that I needed to get a job or multiple jobs to try to pay for that….I may not have been involved
in as many activities as I was.
Chris reported that if he had taken out loans, he would have always had it in the back of his mind while
going through college. Similarly, Elizabeth, who was in her mid-20s, believed that immersion in debts for
the next 15 to 20 years of her life would be a big drawback, and the idea made her very uncomfortable.
Three participants reported that they would rather go to a community college first and then transfer to an
institution that is closer to home or costs less in order to avoid incurring a significant amount of debt. For
example, Jacob, a current undergraduate student, said,
If I had to choose between taking on debt while staying at a university and moving back home
without debt, I would move back home. I would feel like there would be too much pressure on
myself to pay back the loans and find a job and everything else I needed to do.
Some participants said that their parents have already been in difficult debt situations and now fear being
deep in debt. Hannah explained,
My parents have a mortgage and they have car loans. I guess we would avoid borrowing money
if there was another way for paying for something certainly….We don’t have a lot of money and
so we avoid being in debt more than is absolutely necessary.
Clearly, fear of heavy debt burden prevented these participants and their parents from taking out more loans
to invest in higher education.
Estimation of the Benefits of College Education
The participants’ estimations of the value of college education also affect their decisions about investing in
their own education. A few participants reported that they did not have a clear understanding of the positive
impact of college education on their future lives until they entered college. They initially thought that going
to college may be “a glorious thing,” something they should do “to fulfill their parents’ expectations,” or
“just to do what others do.” However, after experiencing college life, they began to realize that they had
underestimated the benefits and changes that college education would bring to their future life and career
trajectories, and recognized it as a worthwhile investment.
However, several participants still did not believe it was worth taking out loans to pursue undergraduate
study. For instance, Douglas who attended a public four-year university, believed that college is definitely
necessary, but he opposed the concept of paying for it through loans. He said,
The degree of your education in undergrad is not going to be different from institutions….I
wouldn’t have taken out a loan to go to a private undergrad institution. Again, like I said, I don’t
think undergrad is worth taking out a loan to go for.
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Douglas clearly put priority on the cost of attending the institution instead of the institutional reputation.
However, he expressed that he would be willing to take loans for graduate study because of his strong belief
that the prestige, history, and faculty of the graduate school play a bigger role in one’s career opportunities
and development.
Two other participants pointed out that deciding whether taking loans for college is a worthwhile
investment depends, to a great extent, on the student’s major and its potential job market. Daniel, 27 years
old, attended an in-state university to reduce the cost of his education. He explained,
It is dependent on what your degree is in. There is a feeling that as more and more people
obtain college degrees, they are becoming equivalent to what a high school diploma was years
ago. If you get a degree in general studies, it is not going to be as beneficial as one in the science,
business, or engineering.
His words indicate that the college cost and the foreseeable benefits of a specific major should be
taken into account when students make loan decisions. Tonita expressed a similar opinion. Using a
major in painting to describe her point of view, she said,
It’s just not practical for them to take out thousands and thousands and thousands of dollars
when they’re never going to make that much money to pay it back. That’s just insane.
These participants’ comments suggest that as college costs and debt burden increase, students’
uncertainty about their potential job prospects would keep them away from loans.
Lack of Information about the Student Loan System
The interviews show that several participants’ reluctance to borrow also comes from their lack of
understanding about the student loan system and its potential benefits. They reported that they knew little
about the fact that loans occupied a large proportion in the federal and state financial aid system. For
example, Cole paid for college by enlisting the help of both scholarships and his parents. He said that he just
recently learned a little about the financial aid system and started to believe that borrowing would become
common. He became inclined to take loans after being startled by the rapidly increasing cost of college in
the state. He said,
I was shocked. Just a few days ago I was looking at how much Alabama cost, even since when I
went to college, tuition has shot up, even New Mexico is more expensive. I think the percentage
of people who are going to have my situation is going to be very slim in the future. Even the
people who get the Presidential Scholarship, which pays all of their out of state tuition, they go
‘Ok, what else you got for me?’ because it’s not enough anymore because they still need another
$13,000 for housing, fees and books and stuff. I think it’s going to be really hard for kids in the
future to not have to take out loans.
Kellie, an educational administrator at a community college, paid college costs through her parents’
support, part-time jobs, and credit cards. She only learned about student loans from her college
friends. She said,
Honestly, coming out of my senior year, I had no clue what a student loan was. I didn’t know
how to even go and find out about it....pretty much through a couple of friends who were
having to borrow. I didn’t find it out from my professor or any advisor here.…If I would have
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had somebody to sit down and tell me what the details of the student loan are, I probably would
have looked into it.
Her statement indicates that she and her parents had not been well informed about financial aid matters
before she entered the college. Both Kellie and Cole’s comments reveal the emergent need for collaboration
between high school counselors and student financial aid administrators to facilitate students’ understanding
of college financing options.
Strategies for College Payment
Data analysis shows that among the 30 participants in this study, college cost, financial aid in the form of
scholarships or grants, and family income were the factors that most influenced students’ decisions about
where to attend and how to pay for college. The strategies that these non-borrowing students employed to
pay for college include scholarships, family support, part-time jobs, and the Prepaid Affordable College
Tuition (PACT) program.
Scholarships and Grants
The majority of the non-borrowing participants in this study identified scholarships and grants as the most
desirable types of funding to receive to pay for college. They applied for various kinds of scholarships and
grants based on academic achievement, program of study, or financial need, such as institutional
scholarships, private scholarships, National Merit Scholarships, and federal and state grants. The amount of
these scholarships and grants ranged from covering part of the tuition to covering all the costs, such as
tuition, books, dormitory housing, and other living expenses. For example, Hannah obtained her bachelor’s
degree from a large public research university. Highlighting the importance of scholarship to her college
decisions, she noted,
I didn’t have a college savings account or anything. My parents don’t have a lot of money, and I
didn’t want to have a lot of debt forever that I was paying for my entire life, and so it was very
much based on how much money I got….So it was a pretty determinative factor.
She further explained that if she had not received any kind of scholarship, she would have gone to a
community college near her home so that she could have paid less or taken out fewer loans. She felt
borrowing would be a last resort.
Similarly, cost of education and how to pay for that cost influenced Michael’s college choice:
I was lucky enough to get a scholarship. I didn’t have to worry about paying for it. But if cost
was a factor…I probably would have ended up somewhere else. When I was first thinking of
going out of state, I had to have received a scholarship.
Debbie held the same view. She said, “I went to an in-state public university. I decided to go there because I
had a scholarship to attend any in-state college.”
Michael and Debbie’s comments suggest that students from lower- or lower-middle-income families try
to avoid incurring debt and tend to make decisions about college choice and payment based on the extent to
which they can receive scholarships or grants. Increasing college costs, family income, and aversion to loans
seem to limit their college choices.
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Xue and Chao: Non-Borrowing Students’ Perceptions of Student Loans and Strategies of Paying for College
Family Financial Support
Many participants believed that the economic situation of their family influenced their decisions on how to
finance college. About half of the participants did not have any scholarships or their scholarships did not
cover all the expenses related to complete a college education. They received varying degrees of financial
support from their families, ranging from a small portion to all of the costs, depending on their family’s
resources. These participants reported that their parents provided financial support for their college
education in order to reduce or eliminate their potential loan burden.
For example, Anna transferred to a public university after completing two-years of study at a community
college. She noted,
If I would have been looking at private schools, it would have been different. If I had been
looking at $20,000 or $25,000 a year in tuition, I probably wouldn’t be doing this because I
would have student loans….It definitely kept me from looking at private schools.
Anna explained that her parents supported her attendance at a public university because they wanted both
her and her brother to graduate without debt.
When asked about their attitudes towards borrowing for their current or future children’s college
education, most participants emphasized that borrowing would be the last resort. They said that before
borrowing, they would prefer to help pay for their children’s education and would encourage their children
to get scholarships. For example, Bethenny clearly stated her determination to provide financial support for
her future children.
I would do everything I could to avoid them having to take on loans….I am going to try to be
much more proactive in paying for their education….opening some kind of fund when they are
born and putting money into it each year until they are 18. Really anything I can do to reduce
the need for them to really depend on anyone other than me to go to school.
For Marissa, taking loans would also be the last option when trying to find ways to help her children pay for
college. She said,
I am going to help them find other ways, like get your ACT prep courses, and really invest in
stuff like that to get scholarships…after doing all of that, and they just couldn’t make the ACT
or couldn’t be successful in some kind of scholarship program….If I couldn’t help them pay for
it, then I would be open to loans.
Many other participants indicated a desire to financially contribute to their children’s education while
avoiding loans.
Full- or Part-time Work
Twenty-seven participants worked full or part time to pay their college costs. They worked in roles such as
restaurant server, secretary, salesperson, tutor, typist, assistant, or babysitter, or had summer internships.
Their work time ranged from about 6 to 45 hours a week, depending on their abilities and financial
situation.
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Xue and Chao: Non-Borrowing Students’ Perceptions of Student Loans and Strategies of Paying for College
When asked whether working had hurt their academic studies, most participants said no. They felt that
working definitely helped their academic studies and gave them valuable experience. Working taught them
how to make efficient use of their time, apply their knowledge to practice, and develop their sense of
responsibility. Working also enhanced their communication skills and confidence, built up their profile, and
prepared them for post-college life and employment.
Laura, who worked about 20 hours a week during college, said,
It helped my education. It helped me stay focused, grounded, and taught me time management.
It also taught me the responsibility that I needed to learn upon entering the workforce.
Chris, a current senior undergraduate student, noted the positive impact of campus work on his study. He
said,
I’ve actually had a higher GPA after I started working. It has provided me with discipline and
makes you do your school work before you go to work.
The participants’ experiences indicate that appropriate work can facilitate multiple aspects of their growth
rather than interfere with their academic progress. However, five students who worked more than 25 hours
per week reported that working jeopardized their academic success and precluded them from involvement
in extracurricular activities. Jacob, a 23-year-old current undergraduate student, stressed,
Working definitely hurt my academics because I worked odd hours. I would work overnight
shifts at the front desk at the dorms. I thought for some reason I would be able to study during
these times, but I was always too tired to do anything productive.
Elizabeth, who worked 40 to 45 hours a week while taking 15 credit hours, also admitted that it was very
hard for her to juggle both. The remarks of Jacob, Elizabeth, and others suggested that students should
keep a balance between study and work.
PACT Program
A few participants participated in the PACT program to fund their undergraduate education. Through
PACT, parents or other family members pay toward their children’s college tuition starting in early
childhood, freezing the tuition at the rate established when the payments begin. PACT eliminated the issue
of college tuition for participants attending in-state public institutions. The program assists parents in
planning for their children’s future education, secures their children’s ability to afford college, and reduces
the families’ future economic pressure. For instance, Jacob said that his uncle had fully contributed to his
PACT program, so college costs and family income did not restrict Jacob when he decided where he would
attend within the state. He said,
Since I had the PACT, there were not many other expenses….I really had the freedom to go
wherever I wanted.
On the other hand, this program actually restrained some participants’ institutional choices. Sharon
complained,
The prepaid tuition was only for public institutions. It didn’t apply to private colleges.…My
parents would lose the money had I come to private institutions.…So that was not even an
option for me.
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Xue and Chao: Non-Borrowing Students’ Perceptions of Student Loans and Strategies of Paying for College
Tonita especially emphasized the constraint of the PACT program on her ability to choose a college.
She asserted that if she had another chance to choose her undergraduate institution, she would have
applied to her dream university.
Discussion
Findings
This study finds that non-borrowing students from lower- or lower-middle-income families are generally
averse to paying for college through loans. The results are consistent with previous literature that lowerincome students are more likely to be debt averse than those from privileged backgrounds (Burdman, 2005;
Callender and Jackson, 2005; Mortenson, 1988).
The strategies that these students employ to finance their postsecondary education include scholarship or
grant applications, family support, full- or part-time jobs, or the PACT program, all of which have
prevented them from getting into debt. For these students, who are from economically disadvantaged
families, access to scholarships and grants, how much they can receive from these sources, college costs, and
family income are determining factors when they consider where to go to college and how to pay for it.
Heller (2006) stated that need-based scholarships and grants have enhanced college access and persistence
of students from lower-income families. Other scholars have argued that grants play a critical role for lowerincome students in making college enrollment decisions (Heller, 1997; Jackson and Weathersby, 1975; Leslie
and Brinkman, 1988; Moore, Studenmund, and Slobko, 1991).
Beyond scholarships and grants, financial assistance from families helps students stay out of debt and
reduces their anxiety about college costs. Even though some parents have already been in debt, they try to
contribute as much as they can to their children’s education because they do not want their children to bear
a significant debt burden after graduation.
Full- or part-time jobs also appear to be a means by which non-borrowing students meet their financial
needs throughout college. Cunningham and Santiago (2008) stated that more than 30% of non-borrowers
work full time while enrolled. Additionally, prepaid tuition programs, such as PACT, decrease families’
economic burden when it comes time to pay for college.
These strategies can help non-borrowing students to successfully complete college without incurring a
heavy debt load that will burden them in the future. However, their loan avoidance could limit their college
enrollment choices and access to educational resources and career opportunities, which may constrain the
degree of their acquisition of cultural, social, and economic capitals described by Bourdieu (1977).
This study also sheds light on the reasons for non-borrowing students’ aversion to loans, including
parental influence, fear of economic burden, underestimation of the value of college education, and lack of
information about the student loan programs.
The data collected in this study indicate that parents are actively engaged in their children’s decision
making on college education. Existing literature has consistently shown that students commonly consult
their parents when they consider college access and undergo the college application process (Brooks, 2004;
Perna and Titus, 2005; Rowan-Kenyon, Bell, and Perna, 2008). This study suggests that parents’ approaches
to household financial management and their negative attitudes toward borrowing for college directly lead to
some students’ aversion to loans. These results are in line with previous studies (Ivan and Dickson, 2008,
Shim, Barber, Card, Xiao, and Serido, 2009). In a quantitative study, Grinstein-Weiss, Spader, Yeo, Taylor,
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Xue and Chao: Non-Borrowing Students’ Perceptions of Student Loans and Strategies of Paying for College
and Freeze (2011) found that high credit scores and low credit card debt in adults are associated with high
levels of money management ability learned from their parents.
As the rising cost of college tuition outpaces salary increases, most families are finding college less and
less affordable. The average family income in the United States rose less than 9% between 1980 and 1997,
whereas in the same period, the average tuition at both private and public colleges increased by about 105%
(Baum, 2001). Between 2000 and 2010, college tuition and fees rose 92% compared to the 18% increase in
median family income (Silvia, Seydl, and Watt, 2012). Families with higher incomes may find student loans
less daunting because these parents expect to be able to help their children in debt repayment. However, this
study suggests that lower-income families view student loans as an additional economic burden that is
compounded if they are already in debt for other necessities. Hence, the income and debt repayment
capacity of these parents keeps them from investing in their children’s education through loans.
The participants’ fear of future economic burden also explains their reluctance to take loans. Many of
them believe that their fear of debt burden relates to their families’ disadvantageous economic capital. In
this study, nearly all the participants acknowledged that their college experiences would have been
completely different if they had taken student loans. Borrowing would pose hardships on their college life,
as keeping debt levels manageable would require students to increase their work hours, devote little or no
time to campus activities, and finish their academic programs as soon as possible. After college, this debt
burden would certainly influence their future life decisions, such as pursuing a post-baccalaureate degree,
purchasing a house, getting married, raising children, or choosing a career. Therefore, this group of students
tends to avoid loans and the consequent debt burden through scholarships, parents’ support, attending
lower-cost institutions, and other methods.
According to Bourdieu (1977), disadvantageous economic capital would make students relatively
conservative in seeking academic opportunities and negatively impact their academic progress as well as
access to cultural capital. However, for students from affluent families, loans may not count as a barrier
even if when they are in poor financial straits because they can extricate themselves from a plight through
the help of their parents. Their advantageous economic capital can facilitate their acquisitions of cultural
capital that, in turn, would bring them power, status, and capital. Therefore, the current educational loan
system does not serve lower- or lower-middle-class students very well, but would reproduce their
disadvantageous economic, social, and cultural capital and reinforce education inequality.
Another factor in some participants’ reluctance to take loans is their underestimation of the value of
college education. Through experiencing the college, most participants in this study recognize that college is
worth the investment, and, when necessary, it is even worth taking loans to pay for college. They believe
that a college degree will produce both economic and social benefits. Their belief is supported by data from
the Current Population Survey, which shows that college graduates on average earn more than high school
graduates (Day and Newburger, 2002). Day and Newburger (2002) argued that beyond giving increased
earning power, higher education can make students more open-minded, improve their communication skills
and social status, and enhance their knowledge of world affairs. However, three participants still stick to
their initial belief that it is not worthwhile to finance undergraduate study through loans. One participant
holds that there is no difference in undergraduate education among institutions. However, research indicates
that different institutions may bring different benefits to students’ academic and career trajectories. Thomas
(2003) proposed that graduates from mid-selectivity private institutions have earnings about nine percent
higher than those from low- and mid-selective public institutions. Students who are reluctant to take loans
to go to a higher-quality college may lose some opportunities. Burdman (2005) stated that “students who
fear borrowing may not seriously consider the benefits of higher education, relegating themselves to lowerpaying jobs and fewer opportunities” (p. 2). A student’s underestimation of the benefits of college education
closely associates with his or her parents’ cultural capital. We suggest that students and their parents,
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Xue and Chao: Non-Borrowing Students’ Perceptions of Student Loans and Strategies of Paying for College
especially in the case of academically outstanding students, consider the long-term economic and social
benefits of completing a college degree from a prestigious university, rather than only comparing the shortterm earning potential upon graduation with the college cost.
Despite the importance of college education, in the face of growing college tuition, increasing reliance on
loans, and the depression of employment market, identifying ways to ensure loan repayment without
negatively affecting college experience or future daily life needs close attention. The fact that students,
particularly those from economically disadvantaged backgrounds, think that whether a student takes loans
should depend on the market value of the student’s major raises a real issue. Choy (2004) proposed that
students’ ability to repay loans usually relies on their ability to obtain well-paying jobs after graduation.
Drawing data from the Bureau of Labor Statistics, Hecker (1992) noted that “there are more jobseekers with
college degrees than there are openings in jobs requiring a degree” (p. 3). In 2012, more than half of college
graduates under 25 could not find full-time work, and wages for recent graduates were lower than they were
in 2000 (The Nation, 2012). For students whose families may lack financial resources to support them if they
encounter difficulties in loan repayment, uncertainties about their future job prospects and their ability to
meet repayment obligations make them hesitant about taking student loans (Choy, 2004). Thus,
policymakers should identify ways to solve the debt dilemma of economically disadvantaged students.
Some students’ unfamiliarity with their student loan options and college costs also give rise to their
avoidance of borrowing. Several studies suggest that low-income high school students and their parents are
more likely than others to lack information about college costs, financial aid opportunities, and the
admission process (Avery and Kane, 2004; The Institute for College Access & Success, 2008). In light of the
information divide, financial aid administrators and high school counselors have an obligation to inform
their students about these issues. In addition, high school counselors in particular should assist students in
weighing the benefits of college education against the costs of borrowing, finding ways to reduce college
costs, and assessing various education and financing options in order to make appropriate postsecondary
education decisions.
Mortenson (1988) argued that students from socioeconomically advantaged families are more willing to
take loans and consequently have more opportunities than those from lower- or lower-middle-class families.
He stated,
The differences in attitudes about student loans among different portions of the population
suggest that loans may not be equally effective in meeting educational equity aims of financial
aid for all aid applicants (Mortenson, 1988, p. ii).
Debt aversion may threaten the ability of the financial aid system to accomplish its original purpose.
Burdman (2005) stressed,
Given the increasingly important role of student loans in financial aid packages, perceptions
about debt influence the ability of loan programs to achieve their goal of equalizing
opportunity for students at all income levels (p. 1).
The current financial aid system still puts college out of reach for students from disadvantaged
backgrounds. Absolute equality in educational opportunity has not yet been realized. According to Bourdieu
(1977), economic capital mediated by the education system, to a certain extent, determines the possession of
cultural capital that functions to reproduce social inequalities and maintain the status quo. With
advantageous economic capital, upper-class individuals can preserve their powerful positions in the social
structure. Therefore, the debt dilemma and its interference in the equality of education opportunity pose
serious issues for governmental officials and higher education policymakers.
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Limitations
There are three limitations to this study. First, we did not conduct the interviews ourselves and only had
access to the transcripts. Therefore, the researchers could not control for the interviewer’s interviewing
skills, the quality of the transcripts, or their researcher roles to the participants. We tried to enhance the
trustworthiness of this study by employing peer debriefing.
Second, because we used interviews for data collection, this study does not employ methodological
triangulation. Methodological triangulation involves using more than one method, such as interviews,
observations, questionnaires, and documents to collect data and can increase the validity of the results
(Denzin, 2006). Again, we used peer debriefing to enhance the trustworthiness of this study.
The third limitation relates to transferability that refers to the degree to which the results of a qualitative
study can be generalized or transferred to other contexts (Merriam, 1998). The sample that consists of only
Caucasian and African American participants cannot represent all of the non-borrowing students in
America. Most of the participants in the study were pursuing or had obtained their bachelor degrees at
public institutions. In addition, all institutions attended by the participants are located in the Southeast
region of the United States. Therefore, researchers should be cautious about generalizing the results of this
study to other ethnic groups, institutions, and regions.
Conclusions
The original purpose of student loans is to broaden college choice and access, and loans have helped a
growing number of students to enroll in college (e.g., Baum and O’Malley, 2003; Burdman, 2005; Price,
2004). However, students’ perceptions of loans do not always conform to policymaker’s intentions
(Burdman, 2005), and based on our findings, some students from lower-class backgrounds may not
recognize loans as “financial aid” at all. Debt aversion reduces students’ access to and choice in selecting an
institution of higher education, and it may impact their choice of major as well as their college experience.
The results of this study indicate that students from lower- or lower-middle-class families generally avoid
taking loans to support their postsecondary education. This study further identifies the deep reasons for
these non-borrowing students’ aversion to loans and reveals the limitations of loans in achieving education
equality. Grant, college cost, and family income are the most important factors to consider when students
make decisions on where to go and how to pay for college.
Our findings have implications for education policymakers, high school counselors, and college financial
aid coordinators about how to change non-borrowing students’ negative attitudes towards loans or make
changes in the financial aid system to reduce the burden of student loans on those from disadvantaged
social classes. Drawing on the results of this study, high school counselors, and college financial aid
administrators should implement outreach programs to help loan-averse students and their parents become
familiar with the financial aid programs and to encourage them to consider all sources for financial
assistance for postsecondary education, including student loans. One way to accomplish this would be
assigning specialists to high schools to introduce students, parents, and guidance counselors to the current
state and federal financial aid programs. High school counselors should help students and their parents
conduct a cost-benefit analysis relating to college costs and student loans to help them make well-informed
decisions.
Additionally, higher education policymakers should make reforms to the current loan system to
overcome its constraints on students from economically disadvantaged backgrounds and broaden these
students’ education opportunities. Such reforms could include increasing need-based aid, decreasing student
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Xue and Chao: Non-Borrowing Students’ Perceptions of Student Loans and Strategies of Paying for College
loan interest rates, and developing alternative loan programs targeted specifically to students from
economically disadvantaged families. Policymakers can also implement income-contingent repayment
policies to reduce the economic burden of loans on lower-income students.
The main purpose of financial aid is to provide students with more opportunities for college access and
choice. However, this study offers insights into the difficulties inherent in the college choice process of
economically disadvantaged students. The results of this study suggest that non-borrowing students’ debt
aversion may limit their college choices, which may hinder their acquisition of education credentials and
social mobility. As a consequence, these students’ cultural capital will be reproduced and the current
financial aid system will not create education equality.
Our study contributes to the literature on student loans by using a qualitative perspective to explore the
deep reasons for non-borrowing students’ aversion to loans and their strategies for college payment. Future
research should address the experiences of students from different ethnic groups or a broader range of
socioeconomic backgrounds. Further research might also investigate students’ experiences with a specific
financial aid program or within a specific institutional culture.
Nexus: Connecting Research to Practice
•
High school counselors and college financial aid administrators should implement
outreach programs to help loan-averse students and their parents become familiar with the
financial aid programs and to encourage them to consider all sources for financial
assistance for postsecondary education, including student loans.
•
Higher education policymakers should make reforms to the current loan system to
overcome its constraints on students from economically disadvantaged backgrounds and
broaden these students’ education opportunities.
•
Policymakers should implement income-contingent repayment policies to reduce the
economic burden of loans on lower-income students.
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